North American News
Dow Industrial Average and S&P higher. Nasdaq lower
- Dow up near 1%
The major US stock indices are and in the day mixed. The Dow industrial average led the way with a gain of near 1%. The NASDAQ index fell but erased most of the declines and closed near the highs for the day.
The final numbers are showing
- Dow industrial average up 327 points or 0.98% at 33601.16. When session lows the Dow industrial average was down -28.3 points.
- S&P index of 15.18 points or 0.37% at 4124.50. At session lows, the S&P index was down -10.53 points.
- NASDAQ index down -32.46 points or -0.27% at 12189.44. At session lows, the NASDAQ index was down -135.38 points
The Dow gains were led by UnitedHealth and Chevron. Below are the top five gainers of the Dow:
Atlanta Fed GDPNow dips further to 1.7%
- Atlanta Fed Q1 2023 GDP estimate
The Atlanta Fed GDPNow estimate for Q1 growth fell to 1.7% from 2.5% on March 31. In their own words:
The GDPNow model estimate for real GDP growth (seasonally adjusted annual rate) in the first quarter of 2023 is 1.7 percent on April 3, down from 2.5 percent on March 31. After this morning’s construction spending release from the US Census Bureau and the Manufacturing ISM Report On Business from the Institute for Supply Management, decreases in the nowcasts of first-quarter real personal consumption expenditures growth and first-quarter real gross private domestic investment growth from 4.6 percent and -7.3 percent, respectively, to 3.7 percent and -8.5 percent were slightly offset by an increase in the nowcast of first-quarter real government spending growth from 1.7 percent to 2.1 percent.
Fed’s Bullard: Markets ‘should listen to me’ on rate outlook
- Comments from Bullard
- The market is focusing too much on banking strains
Maybe it’s the Fed and regulators that should have been focusing a bit more on banking strains? The Fed was briefed on SVB in February and did nothing for years as Randal Quarles dismantled supervision and regulation.
- I expect inflation to be stickier and the labor market strong
- Markets ‘should listen to me’ on rate outlook
- The Fed needs rates above 5%
IS ISM March manufacturing index 46.3 vs 47.5 prelim
- US March 2023 manufacturing survey from the Institute for Supply Management
- Prior was 47.7
- Prices paid 49.2 vs 51.0 estimate. Last month 51.3
- Employment 46.9 vs. 49.1 last month
- New orders 44.3 vs. 47.0 last month
- Production 47.3 vs 47.3 last month
- Order backlog 43.9 vs. 45.1 last month
- New export orders 47.6 vs. 49.9 last month
- Imports 47.9 versus 49.9 last month
US S&P Global final March manufacturing PMI 49.2 vs 49.3 prelim
- The US PMI from S&P Global
- Prelim was 49.3
- Prior was 47.3
US construction spending for February -0.1% versus 0.0% expected
- Construction spending for February 2023
- Prior month -0.1% revised higher to +0.4%.
- Construction spending for February -0.1% versus 0.0% expected.
- Total construction spending -0.1%.
- Private construction 0.0% % versus 0.0% last month
- Residential construction -0.6% versus -0.6% last month.
- Nonresidential construction 0.7% vs +0.9% last month.
- Public construction -0.2% vs -0.6% last month.
- Total construction is up 5.2% YoY with residential construction -5.5%, nonresidential construction up 16.8%
US regional banks begin to tilt lower, hurting sentiment
- KRE regional bank ETF down 1.3%
Eyes are on the KRE regional bank ETF as markets wobble in the start of the new quarter. It’s down 1.4% and the weakness has spread to other markets.
Fed’s Cook: US has low unemployment, high inflation. Thus the Fed is focused on inflation
As a Federal Reserve Governor Lisa Cook has a vote on the Federal Open Market Committee (FOMC).
- US has low unemployment, high inflation. Thus the Fed is focused on inflation at present
- The disinflationary process is underway but we are not there yet
Commodities
Silver stays above $24 despite retreating from weekly highs
- Silver price dips but staus nearby YTD highs as the US Dollar weakens.
- XAG/USD is underpinned as US Treasury bond yields collapse with investors pricing a less aggressive Fed.
- St Louis Fed President Bullard forecasts rates above 5%, says OPEC’s oil production cut will make Fed’s work “difficult.”
Silver price is trading below its opening price by around 0.37%, though it stays above the $24.00 threshold. Falling US Treasury bond yields and a soft US Dollar (USD) are two reasons for XAG/USD’s rise. At the time of writing, the XAG/USD exchanges hands at $24.01.
The sentiment is deteriorating. US equities fluctuated after the S&P and the ISM Manufacturing PMIs, showing that business activity in the US is contracting. Recessionary fears are rising, and tighter lending conditions are weighing on businesses.
Therefore, safe-haven flows towards the precious metal segment, maintaining Silver prices nearby yearly highs. US Treasury bond yields are collapsing as investors have begun to price in a less aggressive US Federal Reserve (Fed), even though an official estimates rates above 5%.
The St Louis Fed President James Bullard said that the Fed needs to raise rates above 5% and emphasized that his forecast is above the median. Bullard commented that OPEC’s cutting oil output would make the Fed’s work “difficult.”
The US Dollar Index, a measure of the buck’s performance vs. six peers, tumbles 0.41%, at 102.168.
Another reason that keeps the commodity prices higher is the Organization of Petroleum Exporting Countries and its allies’ (OPEC+) decision to reduce oil production by 1 million barrels, which led to a boost in oil prices.
Gold Climbs to one-week highs, eyes $2,000
- Weaker Dollar and lower Treasury yields boosts the yellow metal.
- XAU/USD up by $40 from Monday’s low, approaches $2,000.
Gold price is up by almost 1% on Monday, after rising more than $40 from the daily low. XAU/USD bottomed on Asian hours at $1,949 and then reversed it course. Recently reached at $1,990 the highest level in a week. It remains near the high, with a positive tone as the US Dollar tumbles.
After a negative weekly opening market by the shock from the OPEC+ unexpected production cut, gold stabilize and on European hours started to move higher. It accelerated after the beginning of the American session. It is hovering around $1,990 looking at the $2,000 area.
The yellow metal gained momentum amid a slide in US yields, a weaker US Dollar and risk appetite. The US 10-year yield fell to 3.40% after the release of the US ISM Manufacturing PMI. The US Dollar Index is down by 0.45%, hovering around 102.15, after reaching levels under 102.00. In Wall Street the Dow Jones is gaining by 0.68% and the S&P 500 is flat.
The positive tone in XAU/USD could trigger more gains and a test of the $2,000 area. A daily close above would point to further gains. Another failure at current levels could trigger a bearish correction. Large price swing could continue, taking into account what’s ahead in the economic calendar. After today’s softer ISM Manufacturing PMI, attention turns to Wednesday’s ADP Private Employment and ISM Service PMI; on Friday the official employment report is due.
OPEC+ JMMC reaffirms that voluntary oil output cuts will be 1.66 million bpd
- The meeting has come to an end
As mentioned earlier, it just reaffirms the totality of the move from the weekend and Russia’s own 500k bpd cut.
EU News
Germany March final manufacturing PMI 44.7 vs 44.4 prelim
- Latest data released by S&P Global – 3 April 2023
- Prior 46.3
Overall activity continues to decline in Germany’s manufacturing sector despite some improvement in output and supplier performance. The less positive development is that demand conditions remain under pressure and that is weighing on new orders. S&P Global notes that:
“The headline PMI pointed to a deepening downturn in the manufacturing sector in March, but, having been heavily influence by the supplier delivery times sub-index, it masked a second successive, albeit slight, uptick in production levels during the month. Falling input costs were another plus-point, with lower pipeline price pressures a welcome development for inflation, although this is in large part a symptom of cooling demand.
Eurozone core inflation to remain “uncomfortably high” – Deutsche
- A short take by Deutsche Bank on euro area inflation after last week’s numbers
“Both headline and core prints were a touch below our and market expectations. The March print should provide some relief to the ECB after a strong upside surprise in February. Still, we expect core inflation to remain uncomfortably high, in the 5.5%-6.0% range, during spring and summer, which should lead to continued if slower ECB hikes in the next few months as long as market conditions remain orderly.”
Eurozone March final manufacturing PMI 47.3 vs 47.1 prelim
- Latest data released by S&P Global – 3 April 2023
- Prior 48.5
The headline reading is a 4-month low and that comes despite manufacturing output hitting a 10-month high in the euro area. The drag mostly comes from a month-on-month decline in the Suppliers’ Delivery Times Index (which is inverted in the calculation of the headline PMI) surging to a survey-record. As for the more vital components in measuring manufacturing performance i.e. output, new orders and employment, they were all mostly little changed. S&P Global notes that:
“Eurozone manufacturing remains in troubled waters, with factories reporting a fall in demand for goods for an eleventh straight month amid the surging cost of living, tighter monetary policy, a shift to inventory destocking and subdued customer confidence.
Other News
IEA says oil market was already set to tigthen in H2
- Comments from the IEA following the oil output cut
- Oil markets were already set to start tightening in H2 with the potential for a substantial supply deficit
- Cuts risk exacerbating a strained market and pushing up oil prices amid inflationary pressures
There was a strong consensus about a tight H2 market due to rising Chinese and Indian oil demand. How this move hits the physical market will bear out over the summer but much of it hinges on whether the economy can remain strong.
Trump boards plane leaving from Florida to surrender to charges in New York
- The Stormy Daniels saga continues
Trump boarded a plane destined for New York, according to reports.
Trump was due to surrender at the Manhattan District Attorney’s Office tomorrow and will likely be fingerprinted prior to appearing before a judge for an arraignment where he will plead not guilty.
White House: We don’t think OEPC production cuts are advisable
- Comments from the White House spokesperson
- We don’t think cuts advisable given market uncertainty
- We made that clear to OPEC
- US will continue to work with producers and consumers to ensure growth and lower prices for consumers
- Saudi Arabia is still a strategic partner
- We don’t see eye-to-eye on everything with Saudis but remain partners
- We are focused on oil prices, not on barrels
Cryptocurrency News
Dogecoin price to test support as Musk doubles down on getting his case thrown out with late Friday repeal
- Dogecoin price tanks as bulls refrain from breaking important moving averages.
- DOGE is in negative mode as Musk tries to get his case ended.
- Expect to see more downside pressure in case headlines build against the billionaire.
Dogecoin (DOGE) price is tanking after some volatile moves this Monday in the ASIA PAC and European sessions. Traders are grasping to understand the late filing from Musk’s lawyers on Friday that could mean a systemic risk for Dogecoin. T court ruling that recently spoke in favor of the Commodity Futures Trading Commission’s (CFTC) view of cryptocurrencies and altcoins as commodities. All this puts Dogecoin in the middle of the storm and could see it tanking 20% if the judge rules in favor of Musk.
Dogecoin in eye of storm as Musk puts CFTC win on loose screws
Dogecoin price is taking the blame from several crypto traders and investors as last week’s sigh of relief on the CFTC court win about crypto being seen as a commodity (and thus not falling under Securities & Exchange Commission (SEC) control) could become obsolete. Musk is being sued for $258 billion by a few investors who blame him for pumping Dogecoin. Musk’s lawyers asked for the claim to be thrown out and added in their argumentation that Dogecoin is not a security or commodity, which undermines the recent court ruling in favor of cryptocurrencies falling under the umbrella of the CFTC.
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